...The conference call may contain forward-looking statements about the company, which are based on the belief, opinions, and expectations of the company as on date of this call. The statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. Today, from the management side, we have with us Mr. Vimal Kumar, Managing Director, Mr. Vikas Jain, Chief Financial Officer, and Mr. N. Surendra Sai, Head, Strategy and Overseas Business. I would now like to hand over the call to Mr. Vimal Kumar for his opening remarks. Thank you, and over to you, sir.
Thank you. Thank you very much. Good afternoon. Good afternoon to all, and welcome everyone to our Q4 and FY 2024 earnings call. I appreciate your time today as we discuss our financial performance. This quarter, Best Agrolife reported revenue from operations of INR 135.39 crore, and INR 1,873.32 crore for the full year FY 2024. I would like to open this call, starting with the industry landscape and then our business ops, which Mr. Vikas shall take you through the financial performance. A few words about the industry landscape. The Indian Meteorological Department predicts this year rainfall at 106%, 106% of the long-term average. We anticipate increased demand for our agrochemical product.
On the demand side, we anticipate the season to be good and alignment with the expected good farm results. According to the latest data released by the World Trade Organization, India has emerged as the second largest exporter of agrochemicals globally, a significant leap from being ranked sixth a decade ago. We look forward to improved output globally for agrochemical productions. Our plans for moving to high value technicals is in alignment with us, with this. India is rapidly becoming a major global manufacturing hub for agrochemicals, driven by low manufacturing costs, affordable labor, highly skilled manpower, and production capacity.
As per Mordor Intelligence, the India crop protection chemicals market is estimated to reach $2.48 billion by 2024, and $3.13 billion by 2029, with an indicated CAGR of 4.72% from 2024 to 2029. We expect to launch at least four patented specialty products this year as Best Agrolife. Agrochemicals play a critical role in maintaining crop health and ensuring food security for India's growing population. With increasing pest resistance and rising demand for food due to population growth, the need of effective pesticide has become more pressing. Additionally, this is a growing awareness of the benefits of pesticides in enhancing crop yield. We anticipate upward demand in this sector, especially for safe and effective, active and formulations.
Since the financial year has ended, I would like to highlight some of the milestones the company has achieved this year, reflecting our commitment to innovation, sustainability, and growth in the agrochemical industry. With regard to our agreement with Syngenta for making pyroxysulfone, 85% WG, herbicide branded as Movondo. The partnership holds significant promise, not only enhance the value proposition of new herbicide within a market value of INR 300 crore, but also to generate revenue independently. We anticipate that this product will be instrumental in driving robust growth. We have reached a significant milestone by becoming the first Indian company to manufacture both the active ingredient and the formulation of pyroxysulfone. The achievement will not only set us apart in the industry, but also enhance our control over quality and supply chain efficiency.
Further, our recent acquisition of 99% stake in Kashmir Chemicals enhances our manufacturing capacities, positioning us to meet this growing demand effectively and support our farmers in achieving a flourishing season. On another note, in line with our inorganic growth initiatives, which we have successfully completed the acquisition of Sudarshan Farm Chemicals. This acquisition is strategically and enhancing our market presence and R&D portfolio. In regulatory advancements, we are proud to announce that Best Agrolife received 93 and 94 registrations in all, which is a testament of our commitment to R&D and registration expertise. Additionally, we have embraced sustainability through our recent tie-up for 3 MW solar energy at our Gajraula plant. This green initiative is projected to save us 33% on energy costs, reaffirming our pledge to clean energy and environmental stewardship.
Our innovative edge continuing to be recognized as Best Agrolife secures patent for our groundbreaking products like Tricolor, Warden, Orisulam, and Defender. Throughout FY 2024, we launched over six products, including our one more patented formulation. Earlier, we have in FY 2023, we have launched one, and this FY 2024, we have launched one, another one. In FY 2025, we will be launching four new patented products, so total will be six products in FY 2025. Lastly, we have taken a significant step forward in our digital transformation journey with a SAP S/4HANA Greenfield implementation. This upgrade marks a vital move to enhance our operational efficiency and better serve our customers through advanced technology. We are also in a process of app for dealer and distributors who is with the [Dr. Reddy's].
First, for the distributor and dealer, and then for farmers, we will also launch this app. We have millions of the data for the farmers, data of the million of farmers who are using our product already. For that, this app will be very useful. I want to emphasize that despite anticipated industry challenges, we are confident that our unique portfolio will provide significant protection, mitigation, potential impacts to a considerable extent. Now, I hand over to our Mr. Vikas Jain to elaborate on our financial performance for the quarter and full year. Thank you very much. Thank you, Vimalji. Good afternoon, everyone. Thank you for joining us here today. Just to reiterate, as Vimalji had already mentioned, revenue from operations for Q4 stood at INR 135 crores, compared to INR 254 crores in Q4 of FY 2023.
This represents a year-on-year decline of 46% due to an unexpected seasonal failure in current quarter of FY 2024, as against the normal season conditions in the same period last year. This led to a lower than expected sales, coupled with an unexpected increase in the sales returns. In terms of profitability, our Q4 FY 2024 EBITDA recorded a loss of INR 67 crore against a profit of INR 57 crore in Q4 2023. Furthermore, our Q4 FY 2024 PAT stood at a loss of INR 72 crore compared to a loss of INR 8 crore in Q4 FY 2023. These losses were primarily driven by price erosion, unfavorable seasonal conditions, and higher OpEx due to our investments in the brand building. For the year ended March 31, 2024, revenue from operations grew by 7% to INR 1,873 crore compared to INR 1,746 crore in FY 2023.
This growth was mainly due to a significant growth in the branded sales compared to the previous corresponding period. However, our FY 2024 EBITDA was INR 225 crore, down by around 28% from INR 313 crore in FY 2023. This decline is attributed to our shift in business strategy from institutional sales to branded sales, resulting in higher employee costs and other expenses. The increase in employee costs is due to our strategic investment in manpower to expand the dealer network. Additionally, other expenses have also increased due to incremental travel and marketing expenses. Despite these challenges, our company has managed to sustain itself and continue to focus on growth by shifting our strategy from institutional sales to branded sales. Branded sales have demonstrated a significant growth potential, exhibiting an increase of over 100% compared to the previous year.
This shift is expected to positively impact our top line and bottom line in the coming fiscal year as well. While we have not experienced significant price this year on our products, it is important to recognize that such pressure might persist in the market. I would now like to hand it over to Mr. Surendra Sai to take us through the international business updates.
Thank you, Mr. Vikasji. Good afternoon, everyone, and thank you for joining us today. I am happy to provide you with some insights into our ongoing international business expansion efforts just before we commence the Q&A session. Currently, at Best Agrolife, we stand at the threshold of entering into international market. We have formulated a clear strategy for a long-term sustainable growth that takes into consideration the changes in the global market dynamics.
I would say while it is early stages, our primary focus lies in leveraging our portfolio of specialty and patented products, and these have been pivotal in our success so far in India, and we hope to replicate a similar success abroad. In anticipation of this endeavor, we have been finalizing the countries and regions where our products can yield significant value and margin. We have been filing for patents abroad, and as of now, we have applied for 10 patents across in 54 countries. In addition, we have commenced our registration work in multiple geographies. We have been focusing on the Far East, parts of Africa and also in Europe. We have already opened our holding company in Mauritius, and we look forward to opening multiple international subsidiaries in this year.
We hope and look forward that these foundational steps will yield results for the years to come. That's all from our end, and we can now take questions.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Pradeep Rawat from Yogya Capital. Please go ahead.
Yeah, good afternoon, sir, and thank you for the opportunity. So my first question is regarding our revenue top-line figure for this quarter. It declined very sharply for this quarter, and you mentioned a reason for this, that is, seasonal failure. So can you elaborate on that? What is this seasonal failure that has resulted in such sharp drop in top-line figure?
Yeah. Yeah, Mr. Pradeep. Actually, this main reason for the quarter four, which has declined a lot, because we are into the business, earlier we are into the business of mainly B2B business. Now we are moving to B2C business. And B2B business, this year we have done almost 60% of total our our revenue. And generally, this fourth quarter, you know, it is a placement time, but this last year, you know, I mean, this financial year, which we are talking, this financial year, at the last, you know, because of the supply chain pressure, because of oversupply from the China, that has been done, you know, the oversupply from them. And the price has reduced drastically from last.
If you see from August, this is dropping like August to March, it was dropping a lot. So nobody was, you know, want to keep that stocks, like distributor and dealer. So that is the main reason where we are, you know, this fourth quarter very weak for the sales.
Earlier we have conducted business in B2B mode, and now we are shifting towards B2C?
Yes, this is one of the reasons.
So why this shift? Did we lose contract with some of our customer, or it is like our strategy?
It is our strategy only because now we have our own patented molecules, so we want to develop them in a longer way. That's our strategy decision.
Okay. So, given our, like, very bad results this quarter, and you said that there were market conditions that was the reason. So what gives us confidence to achieve, like, 20% kind of growth this year?
Yeah. Of course, whatever the stretch you can see in the fourth quarter, you will see in the next coming quarter, which is going on now, the first quarter and second quarter. Definitely it is very good because before you start starting the season, if there is something like last year it was, you know, before starting the season, the market was very high, you know, prices were very high. So that is coming in the end of the year, the resulting start. But if you see this year, already price was lower before the starting the season, so that's why fourth quarter was not good. But of course, the effect will come in the first and second quarter, which we will, you can say it will be very, very good. I can say.
So when are you seeing that the market will pick up and we can like, kind of, going to achieve this guidance that you have given?
Yeah.
Second quarter, third quarter, like that.
Sorry, did you get my question? Can you repeat?
Yeah. You are saying that, the market is at, like, very low right now. So, when are you expecting this market to bounce back and, like, go in a pathway that will, yield a 20% growth target that you have given?
Yeah, Mr. Pradeep, got your question. Actually, you are asking, for the market is low. Actually, I was explaining you, for quarter four, market was low. Now it is a quarter one, for FY 2025. This is going, already it's changed. It has been changed from April, May, and now it has changed entirely. And, I hope that this first quarter, will everything better, which is, the fourth quarter we, we are losing.
Okay, fair enough. And my second question is regarding our CapEx that we are doing. Like, what is the CapEx outlay? I think that's INR 200 crore, and where are these CapEx going into?
So, Mr. Pradeep, for the CapEx, earlier we had said that we had a plan of close to INR 200 crore last year, which was our projection that set for two years. But as the last six months have been bad for this industry, we have put our CapEx little bit on hold, and the CapEx would be reviewed again in next two, three months, wherein we have our cash flow, where once it is eased out fully, that is the time we'll again decide the CapEx plan for next year. So as of now, CapEx is on hold, but yeah, what we are expecting is the cash flow will ease out drastically in next three months, and then we'll be preparing the fresh CapEx for next year.
... So we have not incurred any CapEx right now.
FY 2024, we have incurred close to INR 50 crore. From April till now, not much of this CapEx has happened, but it will be taken, decision will be taken in the end of July or so.
Okay, thank you. That's all from my side. Thank you, and all the best.
Thank you. Before we take the next question, we'd like to remind participants to press star and one to ask a question. The next question is from the line of Siddharth Gadekar from Equirus. Please go ahead.
Hi, sir. First, coming to Ronfen, in the presentation you have highlighted that the market size for this product is around INR 8,000 crore, and in the opening remarks, you have said, the Indian Indian agrochemical market is roughly around $2.4 billion. How does a single product be that big in the overall scheme of things?
Yeah. Hello, hello, Mr. Siddharth. You are asking about the Ronfen market size of INR 3,000 crore, is it correct?
Yes.
Market size is not INR 3,000 crore for the Ronfen, maybe we have-
No, INR 8,000 crore. Yes.
Yeah, INR 8,000 crore is a market size, not for the Ronfen. Market size is the, for the sucking pest is the INR 8,000 crore, which we have said in our, statement. INR 8,000 crore is the market size for the sucking pest segment, and this is the very good and ideal product, Ronfen, which is going in the sucking pest segment. The segment is INR 8,000 crores, Ronfen market is not INR 8,000 crores.
Okay. So now in terms of Ronfen, can you give some color on what kind of sales have you achieved in FY 2024, as you are expecting this product to relatively do much better than the industry?
Yeah, definitely. In fact, any product when we launch like this, the Ronfen is a first product in FY 2023 we have launched. FY 2024 was the second year, now it is in the third year. So any product which is really very good, so first year anyhow, because we have to develop that product, farmer has to understand what is that product, any of the product when we launch. And especially patented molecule, where we have three-way combination, where we give the one sort solution to the farmer, there again, we have to, farmer has to understand this some kind of chemistry is working or not. So we can say the first year is a trial year for the farmer. Still we've got, you know, INR 150 crore of sales.
Again, the second year completed, we have got, you know, INR 250 crore of the sales. So which is, according to us, which is very good sales according to the Best Agrolife, because this INR 250 crore in a just second year for any new molecule is a big sale. But definitely the way it is growing, we are hoping in next five year, this will be a big molecule as Ronfen.
Okay, sir, got it. Thanks. So and secondly, in terms of our inventory, when we look at our balance sheet, are we still carrying any high-cost inventory or we are broadly done now with the high-cost inventory?
Yeah. We are already done one, done now, but definitely, in the first quarter and second quarter, whatever the inventories are there, all will be, all will be, numbers will be very less in the second quarter end for the inventory.
Okay, sir. Got it. Thank you.
Thank you.
Thank you. We'll take our next question from the line of Deepak Poddar from Sapphire Capital. Please go ahead.
Yeah, am I audible, sir?
Yeah, we can hear you, sir. Please.
Yeah. Thank you very much, sir, for this opportunity. So just one, just wanted to understand, you mentioned that this April and May market has changed. So we just wanted to dwell more on into it. So what has exactly changed? Has the pricing improved or the pressure that you are seeing from China because of which the pricing were going down or and how is the demand scenario? So can you throw some more light, so what has changed exactly, which is giving you the confidence?
In our commentary, what we said, it is not that directly it is impacting any of the global substance countries to get to know, because mainly we are shifting to B2C business and our patented IP. So if in that case, it is not very directly we can say the market will go down, so we will our performance will go down, market will go up, and our performance directly will go up. In fact, we are in a better position than others because of our IP. But I said, you know, in the first FY 2023, we have launched one patented.
Then second, FY 2024, we have launched our second patented, and this year we are going to start 4 more new patented molecule, which is a very big thing for us as a Best Agrolife, because in Indian industry, in three years, six products, which we have to do, that is something different. Of course, what you question is little bit different, and that I would say, because of the, you know, the how we can say the April, May and June. Of course, this is the season time for us, placement time for us, and for herbicides, mainly it is the consumption, consumption of the products at the farmer level also.
So in that way, you will see, and, I said in my commentary also, the IMD also have predicted that, 106% of this rainfall is coming, and every day we see, you know, how it is going on. If rains will come, so at least, in India, we would say, 25%-30%, more crops will be there, apart from irrigations.
Okay.
So that is also one of the reason. And, other reason is our patented molecule, which we are launching, like, one we have already launched in April, which is Orisulam. The another we are launching in June, that is, the Defender. So each, each time, each two month, we are launching one product according to the season map.
Okay, okay. So, so, given that you have said this year we are looking at 20% revenue growth, right?
... Yeah, 20% revenue growth.
Have you said anything on the margin front? How are we looking the margin this year?
Definitely, we will try to 20% or so EBITDA, we will try to get it.
20% EBITDA margin-
And our-
20% revenue.
Yeah, 20%.
Revenue. So, I mean, I mean, this first quarter itself, I mean, April, May, June, that you are seeing in Q1. So, on a YoY growth basis, can we expect that this 20% growth run rate to be seen in first quarter itself, given that your first quarter-
I cannot say very correctly. It will be like this only, but we are hoping this will be in the first quarter also.
Hoping. Because ideally we are already two months into this first quarter, right? April and May-
Yeah.
And would you be very sure of the trend that you must have seen in this first two months?
Definitely, things are very positive in the same direction which we are talking, in the same direction it is going on. And, we are hoping means, we are confident that, that will be there, 20% growth and, near about 20% raw margin in the first quarter itself.
Mm-hmm. Okay. And how is the situation of the pressure from China? I mean, yeah, I understand that it might not affect you directly.
Yeah.
But in general, from the industry perspective, how are you looking at it?
In fact, it is according to the, you know, we cannot say directly for the entire 100% industry, but definitely there is a 70%, 60% of effect will come to the industry also, because now is decision time. In fact, whatever the Chinese are crazy from, you can say, October to March, that is impacting to now. But if now any changes is coming, so it is the season time in India, from April to September, main season time, so I don't think so directly anything will be anything will be drastically affected to any of the company in the industry.
Okay. But,
So the time is over for China, because China what has to do by March only they have to do. After that, there is no time left. Directly they can impact the market like that.
Potential impact. But in general, I mean-
Mr. Poddar, may I request you to join back the queue, please, as we have other participants waiting?
Yeah, sure. That's it from my side. Thank you.
Thank you.
Thank you.
We'll take the next question from the line of Pratik Kothari from Unique PMS. Please go ahead.
Yes. Hi. Thank you, sir. Sir, can you highlight what kind of inventory write-off that we took this quarter? And how much of that high-cost inventory is still lying in our books, which you said we'll use it over the next two quarters?
Yes, Mr. Pratik. See, Mr. Pratik, so presently, as of March, we had close to INR 92 crores of inventory. This inventory would be liquidated in next six months as we see the season will pan out. So high-cost inventory, most of it, will get consumed during this season. So our new purchases are happening at low prices because the prices are at rock bottom and in fact, in increasing a little bit in China.
So there will be some inventory which is there, which is high cost, but it will be liquidated now, and whatever our new purchases are averaging all these high-cost inventory. This situation is across entire industry, not just with Best Agrolife. So, within six months, the entire inventory, whatever we had from earlier period, will get exhausted.
Right. Just that given that we have this high-cost inventory still lying, which will use six months, I think so, and the prices you said are at rock bottom. So how do we get this 20% margin that we spoke about for the year or even say for the first, second quarter?
So the best part is we have most of our products which are patented products. The issue comes more where we are selling generic products.
The overall generic portfolio will be, in our listing, is close to 20% only. So that's the only portion where it hits us, but rest of the products, where our prices, where, where we are selling patented products, there we are able to maintain the same level of prices. So there we are not reducing the prices. So for those 20%, obviously there's an issue, and some differentiated products might have lesser issue than the generic. Yeah. But that's the reason we are confident that we are going to get that, that range of EBITDA.
Right. And sir, we have mentioned that we shifted from institutional products to branded.
Yeah.
Can you highlight what is that mix currently, what was it last year, and, uh, what is it that you're doing?
Because you also spoke about there are some cost-cutting currently, when it comes to investing for this branded product. So, when I said March 2023, March 2023, our breakup was close to 30%, 70%. 30% was branded and 70% was institutional. And presently, it is close to, I can say more than 50%, close to 60% branded and 40% institutional. Correct. And, and then this, it is in today's pricing scenario, you would expect this to continue, going forward? No, this will improve, more. It will be more than this year, and we are hoping this will be 70%. Because we are, again, I'm repeating, we are, you know, for more product, new patented, molecule we are launching this year.
Right. And sir, last, this CTPR and Ronfen, what are the sales number this year?
Ronfen is INR 250 crore. This is for the FY 2024, which we are talking. And for CTPR, our sales is around INR 155 crore with the CTPR sales. Anything to highlight here for CTPR, I mean, business area is looking much better number. Anything which will play out and- Yeah, for CTPR, you know, we are not focusing too much about the CTPR solo formulation. This is with an MNC company. They are the brand leader in that. And of course, we are doing, which is the number I'm telling you, INR 145 sales. There is two formulation, one in GR and other one in the SC, SC formulation.
But we are focusing on the product where we are using CTPR in our patented molecule, where we have three-way combinations in which there is one product to CTPR. Like, we are launching now one more product, which is CTPR, Novaluron, and Emamectin. So in that also, we are using CTPR. That way, another molecule is also coming in next year, that we are also adding CTPR. So we are using CTPR in our IP portfolio rather than the solo. We are not promoting that much. That was our main target, which we are doing in this FY 2025.
Got it. Thank you.
Thank you. Thank you very much. Thank you.
Thank you. Ladies and gentlemen, to ask a question, please press Star and One on your phone now. Next question is from the line of Abhijit Mitra from Aionios Alpha Investment Management. Please go ahead.
Yeah, thanks for taking my question. I hope I'm audible.
Yeah, yeah.
Yeah. So just couple of questions. First, on the receivables, I think, post H1 or September results, we could see receivables at around INR 1,000 crore plus. Now it has come down to around INR 450 crore or thereabout. If you can draw a bridge as to how you could achieve this reduction?
Yeah, Mr. This is, since this is seasonal business, there is a movement of, receivables, which is different at different times. So presently, whatever you see, INR 450 crores or so, this will further reduce as we go into the season, because obviously the dealers would want to close all their earlier balances before they start buying the new products. So this will further improve in next quarter, and only from, I can say, August or September, this will go up because that is seasonal effect, which happens every time. From August and September, going up to December, it will be highest in our industry, and from now going up to June, July, it will be the lowest. I hope that answers.
Okay. But just to understand, since this is a first-half heavy business, what I could, you know, what we could witness is the last year, as you achieved almost, you know, INR 300 crore plus of sales in the first half itself, the receivables got bloated up all the way up to INR 1,000 crore plus. When H1 of this calendar fiscal comes and you're expecting a good first half, I'm guessing, because you're giving a 20% growth for the full year, what steps are you taking to ensure that this kind of bloat-up of receivables doesn't happen again?
Yeah, definitely, because I again mentioning the same thing. You know, because we have our so many changes we already have in the system, like the mainly product portfolio that is coming new. The product, again, it is a four patented molecule and three more products, which is very exclusive for the for this FY 2025. One is the topramezone. This is first year for us, and this major sales in the fourth quarter. Topramezone also, we are the first indigenous manufacturing in India after. Before that one, MNC company is importing that. Now we are the company, we are the first indigenous manufacturing of topramezone. So these kind of products which we are ensuring not only only for the FY 2025 for the coming year also. Just to add, Mr.
Abhijit, this increase in dealer increase in the receivable balance also last year was higher because of the seasonal failure. Generally, what happens is, if the season is good, the money flows right from, from the farmers to dealers, and to the company is much faster. And also, during, we are already in the process of working around various dealer financing programs, wherein we hope that we just, we onboard a lot of dealers and get money as fast as possible. Thank you.
Okay, and has any factoring been resorted to, to take the receivables off the book?
No, not major as of now, but this would be starting from, say, next month onwards, from mid-June onwards.
Okay. Second question is on inventory. Inventory days, you know, if we look at the last few years, have gone up from, say, less than 100 days to almost 190 days now, 2021, 2022, 2023, 2024. This cycle, when do you think you can break this cycle and, you know, we get to see a more normalized level of inventory coming through? Because, you know, as the cycle remains very volatile, the industry remains very volatile in terms of prices, this kind of high inventory days will eventually lead to, you know, write-downs.
Yes, so. Yeah, so as you rightly mentioned, for this industry, the cycle is going to be little difficult and volatile because it all depends upon the seasonal condition. But this part, with us, is okay, we are a growing company. We can say that this is just about the second year where we are entering full stretch into our dealer business model. So it could be little higher because as we penetrate higher, we need to ensure that we actually cover up the risk... demand and it should be available. This one season, where we expect that it will be good season. This one season will take care of all the inventory issues what we had possibly in last two years.
So we all hope that the season will be good and the inventory takes care of the—the season takes care of the inventory first. Got it. Got it. Yeah, that's all my, from my side. Thanks, and wish you all the best. Thank you, Mr. Arun.
Thank you. The next question is from the line of Gagan Thareja from ASK Investment Managers. Please go ahead.
Am I audible?
Yes.
Yeah, yeah.
Yeah. Good afternoon, sir. So my first question pertains to the acquisition of Sudarshan Farm Chemicals. So INR 30 crore turnover company for which you paid almost INR 130 crore and, you know, there is a common board member on your company and this company. So in a way, you know, there's some related party reference. So just trying to understand, you know, how did you arrive at, you know, that sort of a valuation, uh, almost 4x sales? And, what is the reason or rationale to acquire this company?
So, Mr. Gagan, thanks for the question. So, Sudarshan, till last March 2023, it had close to INR 30 crore turnover, but March 2024, we are going to end up with close to more than INR 20 crore of turnover. So it's around INR 250 crore. So effectively, we are paying just half of the turnover valuation and also the cash flow for this is minimal because after adjusting for all the liabilities and all, we are just about paying close to INR 10 crore. So first part is the, the INR 30 crore was of 2023, but for March 2024, the turnover is close to INR 250 crore. So it's a very reasonable valuation. It's exactly in the similar kind of business, brings about a lot of dealer strength along with IP technical products and manufacturing strength.
The valuation is much more reasonable valuation than if you compare with March 2023 numbers. Obviously it doesn't match.
So, what is the reason for this very sharp jump in turnover from INR 30 crore to... You know, because if you, the history that you have given for that company for the last three years, INR 60 crore, INR 40 crore, goes to INR 30 crore in 2023, and then suddenly INR 30 crore goes to INR 250 crore. How did that happen? And secondly, what is the operating margin and working capital profile?
Yeah, yeah. So the first question, I'll answer, Mr. Gagan. In this, for Sudarshan, you're talking about how the jump is there from INR 30-INR 60 crore to INR 250 crore. In fact, so what Sudarshan has did, Sudarshan is very old name for the farmer, because they have very, very old product, like, farmer used to say, the Sutathion, one of the products which is very popular, like, in the farmer, for the particular product, the Sutathion, and there are many, many products. So this is actually, these brands are 40-50-year-old, 40-year-old brands. So 40-year-old brands, now the, the farmer knows very well. But, the maybe Sudarshan, management don't have much interest to, to, to do this business, for the agrochemical.
That's why they were not very much interested in last five or seven or maybe 10 years. I don't know the exact number of years, but maybe five, seven, 10 years. But now, when we came into the picture, so definitely we were talking to them from last five, six months. And what they did, you know, they were very aggressive. They want to do some strategic, some they want to do, but we propose them that we can take over your company, but there is no strategically we can do anything else. So that's why we came into this. And about the numbers, yeah, Mr. Vikas will answer.
So with respect to the numbers, so till March 2024 when we acquired, Sudarshan had losses because of, for, because obviously they were not able to have the supply chain benefits what Best Agro has. So they were close to a bit of -10% on INR 250 crore. But based on our prediction, what we see, because we have the capability and we have the supply chain benefit, what we can bring on to Sudarshan, our expectation is that we'll have immediate EBITDA levels of close to 25%, which is more than what Best Agro does on its own. So this will obviously be a much higher benefit what we get from Sudarshan. Because what we bring is the supply chain benefits to Sudarshan, which earlier they didn't have.
This year we are hoping more than INR 400 crore revenue itself, Sudarshan only.
Okay. So basically, you are saying that there will be a change in the gross margin profile because of procurement efficiencies that Best Agrolife can bring to bear in Sudarshan Farm Chemicals. Is that what I said?
Yes, yes, Mr. Gagan.
Okay.
Mr. Gagan, I just wanted to add a couple of lines about our Sudarshan acquisition. The acquisition has allowed us two great advantages, and I would say that, you know, this acquisition was at a very fair valuation for us, actually. The first one is that in addition to the fact that, you know, old and well-renowned trade name, which we have already acquired, like, for example, as [Mr. Vijay] goes to Sudarshan. Now, we are able to leverage the distribution network of Sudarshan, and we are building upon that.
... That's what is one part about it. The second part about it is, that Sudarshan also had a very good R&D center, and had a very capable team and a portfolio of backward integration of technical. Sudarshan was not able to leverage or capitalize on this particular pack, and the reason was that they were not able to invest or be able to develop a technical product. So there is a complementary synergy that we are bringing into the picture. We are helping them with our own product. We are helping them with our ability to expand the brand network.
In addition, what they were lacking in terms of a technical production facility, we are helping them in that, and we are also being able to get a very good IP portfolio. And, backward integration of technicals is something which is going to help us in the long run. So all in all, this is a very strategic and a very relevant acquisition for us.
I think if I then adjust-
Mr. Thareja, I request you to join back the queue, please, as there are other participants waiting.
Just a related question, and I'll be through, if it's okay with you?
Yeah, go ahead, please.
My question is that if I then back out INR 250 crores of sales from your reported top line for the year, then essentially excluding Sudarshan, Best Ag's own portfolio hasn't really grown year-on-year, right? If you could, I mean, give us some idea of what actually how to think of the top line being flat in terms of volume movement, in terms of price movement, it would help. And secondly, on pyroxysulfone, you know, you will start supply to Syngenta business. So what are the prospects for pyroxysulfone? Thanks, and I will get back.
So, we are asking for FY 2024 with respect to price and volume units?
Yes. Yes, sir, that's what I'm asking.
So for FY 2024 compared to 2023, our increase... So there is a price reduction of close to, to -6%, which is the reason you see our yearly gross margin has gone down from 28%- 24%. However, the volume growth has been close to 37% in our existing products, 17% increase on our new products. And this increase, which is majorly because of the increase in the branded business, because we are concentrating more, we have reduced our bulk business to that extent. So overall, effectively, you see only 7% increase in revenue. But if you bifurcate business between volume and distance, we have grown by 37% volume in our existing products in branded business and 17% RV new products.
So close to more than 55% coming in branded, and there is a little reduction in the bulk because of the conscious decision we have taken.
On Pyroxysulfone, how should we think for FY 2025?
Yeah, Pyroxysulfone, definitely we increase some market, but definitely the headache will come in the coming year, then some price correction will be also there. So but still, the market size will increase for sure for this product.
Thank you, sir. Thank you.
Thank you, Mr. Vinay.
Thank you. We'll take our next question from the line of Anil Kumar, an individual investor. Please go ahead.
Yeah, good afternoon, sir. So I'm looking at the balance sheet, and there is a good item in intangible assets of roughly like INR 70 crore or more and in tangible assets. So what are these, and how this has come up, and what are these, for the, in CapEx which has gone into it? One other question is, so the other question is on the, last year, Ronfen and CTPR have contributed roughly four-
Anil Kumar, I'm sorry to interrupt. Can you use your handset mode, please? Your voice is not very clear.
Sure, yeah. I'll take that.
Yes, sir.
Yeah. So last year, the Ronfen and CTPR had contributed INR 400 crore to the top line in sales. Now, in this year, you are saying, like, roughly like 2,200 odd would be the net sales. So what would be the contribution from Ronfen and CTPR into this? And the goodwill question, obviously. These two are my two questions. Thank you.
Okay, first I'll answer your second question, then we will answer your first question. So Anil, your first question is for Ronfen and CTPR. In fact, the INR 400 crore, more than INR 400 crore or near INR 400 crore we have achieved this year in financial year 2024 for both the product. And, again, our strategy, actually, I have to repeat, earlier question also I have said the same way. The Ronfen, it is a growing molecule, which is we are in the third year of the Ronfen, and we are hoping this year it will be, give us a very good, you know, margin and sales for the Ronfen.
For CTPR, we are going with a combination which are our unique combination, patented formulation, in which we are, you know, we have CTPR formulation with other molecule also. There are three CTPR formulation, which will be our exclusive and our patented. Out of the three CTPR formulation, one we are launching this year, and another will be launched in FY 2026. So each year we have very good product with the CTPR. That is our strategy in the future of CTPR. And Ronfen, definitely, it will grow because this is very fantastic molecule. We are getting very good response. In second year, we are at INR 250 crores, so we can say it will grow in a very good numbers.
In terms of number also, it will be very good, Ronfen. Now, your first question. Yeah, Mr. Vikas Jain.
So with respect to intangibles and goodwill, so this is majorly coming because of the two acquisitions which we did this year. One is Kashmir Chemicals and the other is Sudarshan. So we have taken various assets, including trademarks and customer relationships from Sudarshan, and there's goodwill which also happened from both these acquisitions. So that's the reason these two numbers are, are, are there as compared to March 2023. Thank you.
Other question that I can put in, sorry. So your sales number and ultimately the cash flow number, there, I mean, I understand that there is a lot of increase in inventories and probably what you call receivables is there. So just trying to understand, if there has been some sales return or write-off from the receivables has happened over here?
Mr. Anil, your voice is not audible. Are you saying that?
Oh, sorry.
If I understand correctly, what you are saying is all the sales return has been taken care, or are we expecting further? Is this your question?
Is there any write-off in the cash receivables that has happened, or do you expect any write-off into that?
No, so we, we don't have major write-offs. Generally, this business has a bad debt ratio of, say, close to less than 1% or 0.5% of business. So we are in the same kind of ratio, and there's no major write-off, which has happened.
There is no sales return as well? I mean, whatever the sales has been booked, you basically is, you are getting the cash against that. That is my understanding, right?
Definitely. Whatever the sales return was there, that happened in the last year only, I mean with the financial year only, financial year 2024. But for now, there is nothing to be get return, for sure.
Okay. One last question, if I can, may ask you. So from the China perspective, which all molecule is the worst hit or kind of where you are most impacted out of it? I mean, can you let us know as to, I mean, what would be the impact to the company and which all molecule is the most hit, impacted, molecule from your perspective?
No, in fact, mostly which are, we are importing from China or industry importing from China, that is this technical, we are talking about, that is already very competitive price and, if price reduce directly, it affect to the Indian industry. But the, to us, as a Best Agrolife, impact is for the raw material majorly, not for the technical directly. Which we are raw material, we are purchasing from China. If that is reduced, so it is actually in another way, if you will see, that is benefit to the Best Agrolife. Because our major product which we are selling, that is our exclusive molecules. That is our patented, either our exclusive molecules, which I am telling, talking about Tolfenpyrad and other products, that is our advantage, to the cost, if you talk about, if the price has reduced.
Lastly, it was more advantage for us, because when we purchase, after that, this all, you know, get down, the prices came down. But now, if you see in this year, prices was down when we are buying, whenever we have purchased from, you can say, September to March. Whatever we have, you know, buy, that old prices has a down prices, and now we will get the advantage with that prices for this year, in the first quarter and second quarter.
Okay. Okay. Thank you, sir. Thank you.
Thank you.
Good luck for the future.
Yeah. Thank you, Mr. Anil. Thank you.
Thank you. The next question is from the line of Sumit Joshi from HNI. We request participants, due to lack of time, please restrict your question to one at a time. Mr. Joshi, please go ahead.
Hello. Am I audible?
Yes.
Yeah, Mr. Sumit, please.
Yeah. So, there are two, three things here. One is with respect to, see, there was about six months back, your ratings got derated, if I'm not wrong, right? On the basis of which, the credit is basically pulled up. Now, I understand that the explanation that was given was that, you're launching new products, and subsequently, a very similar thing to what you said today, the same thing was done in the last one call also, that there are new products that are coming in for this particular season. And because of that, and everyone was warning that there is a lot of China pressure, and because of that, the sales, and the pricing on the sales will have an impact.
But, I think, the management looked very confident that those new products will help you overcome those challenges. I think the guidance that was given was that, maybe not in the third quarter, but by the fourth quarter, we'll be able to maintain the guidance that we had given. It's documented. Now, there are two questions here. One is, what went wrong with these new molecules that were supposed to be launched? Second thing is with respect to the credit rating, the understanding was that probably Q3 and Q4 would be better, and post that there would be a revision in the rating. Now that Q3 and Q4 again have not been very good and in fact have been in loss, do you see a material impact on the further derating when it comes to Best Agrolife?
... So, Mr. Sumit, with respect to ratings, what I want to say is that because obviously there are cash flow issues, and as I said, it's almost we are a growing company, so we had to make investments on our inventory, on our receivables, on our OpEx. So that was the reason that we touched the peak of our cash flow and then our bank loan and everything were at fully utilized level. And the initial part to it was that there was a seasonal failure to it. So with respect to rating, we have been continuously discussing with the-
Hold on. Please hold on. Please, please hold on. Help me understand, the seasonal failure would not have happened in the last one month or two months, right? This is something that was coming-
It happened in last six months.
Right. Absolutely. It happened in the last six months, right? Not last one or two months.
Yes.
So I am saying if you refer to the con call that happened six months back, the very tonality of that was: we know there is a challenge, but because we are coming up with new products and a lot of other things that we are doing, we'll be able to manage this. And there was also a promise on, helping reduce the overall, the cash flow cycle and the working capital cycle, but that's a secondary point. The more important point is that the same thing was said, that everybody knew there is a problem, but if you go back, you can listen to the commentary, it's documented. What it was said was that there are new products coming in for the new season, and we will be able to manage it.
And you can see the guidance was given according to that. It's documented. I'm not saying that, there's something, I'm not saying out of the ordinary. Now, my question here is... Please listen to the question. My question here is, what went wrong that despite being so confident that suddenly things changed? And it was not only six months, I think about two or three months back also, when a lot of people did a cross-check with the company, the thing was that maybe not in Q3, but the product would be ready by Q4, and Q4 would be better. And again, it did not happen.
And the third question here, specifically with respect to the credit rating, the answer that was given was, we've taken time from the credit rating agency, that and we have assured them that our revenue profile and our margin profile will gradually improve in Q3 and Q4, and after that, we are going to do a revisit. Now, where do we stand with respect to all these three things, is what I'm asking?
Yeah. So Mr. Sumit, I was trying to come to exactly that point, that, see, we are into seasonal business. So Q3 is basically the Kharif season, which is from July to September and, say October to December. We, the Rabi season, we were still hopeful because obviously if there are some shortfalls in Kharif season, there is chances that we are able to sell good products in Rabi season. But Rabi also itself was a failure. So we are not like an FMCG company wherein we can give a projection and then ensure that we are achieving at 90%-95%. But because of the seasonal factors, Rabi was bad.
Hold on, please. It's not a 99%, a 95% achievement. The deviation is huge. See, I can understand that it's a seasonal business and there will be variations. The projections were not given by me. The projections were given by the company. And the second thing that I'm talking to, the projections were not missed by a delta of point five percent or 10% from an indication of a profitability of around 30% with EBITDA margins being greater than 20%, we've gone into losses. So it's not a deviation of 5% is what I'm saying. I understand, absolutely, but the deviation is not 5%.
Yes, Mr. Sumit. Once we have shared our direction, that was FY 2023, when we were in the FY 2023, that time we have gave the direction. So the FY 2024, the EBITDA margin will be around 20%, and always we give the direction which we planned. But when season failure or some unavoidable circumstances, which we cannot control, climate, because we are the industry, industry of agrochemical, where everything depends on the crop, depends on the weather, there is many changes. And of course, we have different challenges also, which we are mentioning to you. Of course, we have different challenges that we are mentioning to you.
Sir, again, what about a year back? What I'm saying is, it's the same thing that was said six months back and again three months back.
No, three months back, we didn't say this way. I don't know what, what we said three months back?
Please tell me.
Mr. Sumit?
Yes, tell me. Please, I'm there.
Yeah, yeah. What, what we said in last quarter's earnings call?
Last quarter you did not have an earnings call, sir. The last earnings call that you did was six months back. Please correct me if I'm wrong. Two for-
Yeah, yeah, yeah. Six months back. Yeah, yeah, absolutely correct.
Correct. So you can look at what, the guidance and the, clarifications that were given there. I don't want to repeat them again. You can go back and see that, there was a lot of positivity that despite all these things, things will improve, despite everyone warning. So as sir said, that projections cannot be given, I am saying the projections did not come from me. I did not give those projections. Projections have come from the company. And the second, and the second thing is, even let alone if the con call was not done or whatever that was, which I think was a very poor management practice, I believe in tough times, management should come forward and do con call.
My second point is, even when there were to and fro's to which there is a lot of effort after writing to the-
Mr. Joshi, may I request you to rejoin, please, as we have few participants in the queue?
Sir, sir, I think this is an important question for everyone that is there. Okay, if you don't want to answer it, that's fine. No problem.
I just quickly say what we understand and what we're trying to answer is, that yes, we have given prediction, and yes, it is given by management only, and yes, for future also, we are going to give the prediction. Now, assuming that we are, IMD say that it's a good prediction for next year, according that will work because we'll have to produce the inventory much before the season, right? So last year, also, six months back when management gave the present, the projection, obviously we were expecting a good, end of Kharif and a good Rabi. Rabi is between December to February. But unfortunately, the Rabi season also was one of the bad.
If you can read various reports or other agri input companies, almost all companies in agri input have been very, the profits have gone down by 60%-90%, and even one, two or two, three of them have gone into huge losses for full year. Again, though, does not safely say that it's an excuse for me, but it's an industry-wide trend.
Mr. Joshi, I request you to rejoin the queue, please.
Yeah, yeah, yeah, Mr. Joshi, one more thing at the last, because time, your time is not sufficient. You can reach us directly, and we will explain you in detail. Thank you very much, Sumit, because the time is not allowing us to explain you in detail, so you can reach out to us directly. There is no problem. You're most welcome.
Thank you. We'll take our next question from the line of Keyur, from an individual investor. Please go ahead.
Yes. Hi, sir. Am I audible?
Yes.
Yeah, yeah, yeah, yeah.
So as you said, like, you are focusing more on the B2C business, right? So can you briefly explain the strategies on how are we going to capture this segment? And especially if you could highlight how we have increased our dealer network or then any new states that we have added, for this product.
So yeah, Vikas here. So for B2C business, obviously the increase where we are doing, improving the dealer strength and the employee strength. So with respect to dealers, we have, along with Sudarshan, plus Best Agro, close to more than 10,000 dealer network, which we have presently. And employees, we have hired more than 120 people last year. So, and these are on-roll employees, and also there are something called field assistants, which are off-roll employees. These are close to 1,500 people, which have to go and meet the farmers day in, day out. So all the investments, most of it has been done in FY 2024, all with respect to farmers, field staff, employees, and dealer network. So this year will be the results or the return, which will be coming out from the investments.
Got it, sir. If you could, a follow-up question on that is, if you could, give some brief idea about what are the EBITDA margins on the B2C segment versus the B2B segment side of the business.
So for the B2C business, last year, obviously was a separate year because the season was not good. Otherwise, more or less, we, according to us, the EBITDA margin for our B2C would be close to, say, 23 or so, and for B2B could be, say, around 16-17, giving us an average of 20% EBITDA, which is our prediction.
Got it. So just, it's not a question, just a suggestion, right? I've been an investor in the company for the past two and a half years, and I've been following the investor calls and all, right? Every time we come up with a guidance for the year and the projections, but we have not been able to meet these projections. So I understand that a lot of it is because of how the industry has played out over the last two years. But given that you are in this business for the last more than 10 years, right, so you already have some cyclical trend nature. You already know that this business is a bit cyclical in nature and a bit seasonal as well, right? So if you could just, you know, take these factors into account while giving projections, right?
Because a lot of individual investors like us, right, we do our due diligence, but we also buy on a lot of things that you say, right? So when these things are not met up, we feel that, you know, the projections given by the management is always on the, very optimistic side, but it, it hasn't been played out that way. And second suggestion was that, like, how the, after the quarter three results were, which I feel weren't that great enough as well, right? So I was actually expecting that the management would have another investor call, but at that time, you did not have an investor call. And given that I have significant stay in this company as well, right? So, like, all such kind of things, you know, makes investors like me to...
I mean, there are a few questions that comes about the management and the practices that we are following. So these were just two suggestions that I had, and I hope that you will take this into account.
Yeah, yeah. Thank you, and well, taken care. And, your suggestion is really absolutely correct, and, definitely, sir, we'll taken care. Thank you very much.
Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to Mr. Vimal Kumar from Best Agrolife Limited for closing comments. Over to you, sir.
Yes. Thank you, everyone. We are excited about the future of Best Agrolife Limited. Our commitment to our quality, innovation, and farmer satisfaction remains unwavering as we continue to push the boundaries of what is achievable in agriculture for the prosperity of our farmers. If you have any further questions, please feel free to ask our investor relation team after this, and, we will definitely revert you in time. Thank you all for participating today. Thank you very much.
Thank you, sir. On behalf of Best Agrolife Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.